Reference no: EM132517009

Question 1: A company's product sells for $150 and has variable costs of $60 associated with the product. What is its contribution margin per unit?

$150
$60
$90
$40

Question 2: A company's contribution margin per unit is $25. If the company increases its activity level from 200 units to 350 units, how much will its total contribution margin increase?

$8,750
$5,000
$3,750
$1,250

Question 3: If a company has fixed costs of $6,000 per month and their product that sells for $200 has a contribution margin ratio of 30%, how many units must they sell in order to break even?

2,000
100
180
200

Question 4: A company wants to earn an income of $60,000 after taxes. If the tax rate is 32%, what must the company's pre-tax income be in order to have $60,000 after-taxes?

$143,000
$88,235
$19,200
$79,200

Question 5: When sales price increases and all other variables are held constant, the break-even point will ____________________.

decrease
increase
remain unchanged
produce a lower contribution margin

Question 6: When variable costs increase and all other variables remain unchanged, the break-even point will ___________________.

produce a lower contribution margin
decrease
increase
remain unchanged

Question 7: When fixed costs increase and all other variables remain unchanged, the contribution margin will ___________________.

increase
remain unchanged
increase variable costs per unit
decrease

Question 8: Break-even for a multiple-product firm ____________________________.

can only be calculated when the proportion of products sold is the same for all products
can be calculated by dividing total fixed costs by the contribution margin of a composite unit
can be calculated by multiplying fixed costs by the contribution margin ratio of the most common product in the sales mix
can be calculated by multiplying fixed costs by the contribution margin ratio of a compostite unit

Question 9: Beaucheau Farms sells three products (E,F, and G) with a sale mix ratio of 3:1:2. Unit sales are shown below. What is the sales price per composite unit?

Product E Product F Product G

$11 $8 $9

$41.00
$20.00
$59.00
$28.00

Question 10: Wallace Industries has a total contribution margin of $58,560 and net income of $24,400 for the month of April. Wallace expects sales volume to increase by 5% in May. What are the degree of operating leverage and the expected percent change in income for Wallace Industries?

2.5 and 13%
2.4 and $12%
1.42 and 5%
0.42 and 2.2%

Question 11: If a firm has a contribution margin of $59,690 and a net income of $12,700 for the current month, what is their degree of leverage?

1.18
0.18
2.4
4.7